NEW YORK (Reuters) — General Motors was
hit on Friday with what appeared to be the first lawsuit related to the
recall of 1.6 million cars, as customers claimed their vehicles lost
value because of ignition problems blamed for a series of fatal crashes.

The proposed class action, filed in federal court in Texas, said
GM knew about the problem since 2004, but failed to fix it, creating
"unreasonably dangerous" conditions for drivers of the affected
models.

"GM's mishandling of the ignition switch defect....has adversely
affected the company's reputation as a manufacturer of safe,
reliable vehicles with high resale value," the lawsuit said.

The recall has led to government criminal and civil investigations,
an internal probe by GM, and preparations for hearings by Congress.
All ask why GM took so long to address a problem it has said first
came to its attention in 2001.

A GM spokesman, Greg Martin, said the company has apologized for how
it handled the recall and that taking care of customers was its
first priority. He did not comment on the lawsuit.

The plaintiffs are seeking damages from GM that include compensation
for loss of the use of their vehicles and repairs and diminished
resale value. They are not claiming they were injured in accidents
stemming from ignition problems.

The lawsuit is reminiscent of claims faced by Toyota Motor Corp,
which recalled more than 10 million vehicles starting in 2009.
Toyota last year received approval for a settlement valued at $1.6
billion to resolve economic loss claims and is currently negotiating
the settlement of hundreds of personal-injury lawsuits.

GM announced the recall in February, despite learning of problems
with the ignition switch in 2001 and issuing related service
bulletins to dealers with suggested remedies in 2005.

GM said that when the ignition switch was jostled, a key could turn
off the car's engine and disable airbags, sometimes while traveling
at high speed. GM has said it received reports of 12 deaths and 34
crashes in the recalled cars.

The Center for Auto Safety, a watchdog group, on Thursday said that
data from the National Highway Traffic Safety Administration showed
303 deaths occurred when airbags failed to deploy in two of the
models GM recalled. GM called the report "pure speculation" and the
Insurance Institute for Highway Safety and the National Center for
Trauma and EMS at the University of Maryland said the figure did not
take into account whether airbags would be expected to deploy in
some crashes.

The plaintiffs in Friday's lawsuit, Daryl and Maria Brandt, said
they own a 2007 Chevy Cobalt, which was one of several models
recalled by GM. They said that they have driven their car less than
they otherwise would because they feared being in an accident
stemming from the ignition issues, according to the complaint.

Carl Tobias, a professor at the University of Richmond School of Law
who specializes in products liability, said he did not expect GM
would have to pay as much as Toyota did if it seeks to resolve the
economic loss claims.

The GM recall applied to older models and was significantly smaller
than the Toyota recall, although that could change as the
investigations against GM continue, he said.

GM also has offered owners of recalled vehicles $500 toward the
purchase of a new GM vehicle, a factor that could mitigate any
liability, he said.